August 28, 2019

So you want to mine a Bitcoin? This is how long it will take

How long for a Bitcoin

The insanely bullish market that blew the cryptocurrency market out of all proportions during 2017 brought about a lot of interest into the cryptoverse in general, and for Bitcoin in particular. And that, in turn, persuaded a lot of people that mining bitcoins could be a good source of (more or less) passive income. Those who actually gave it a shot found out that things aren’t that simple anymore.

The mining industry is extremely competitive now, and the requirements are so complicated and expensive that newcomers lose heart rather quickly, and feel that Satoshi’s ship sailed long ago. Eight years ago, the prevalent difficulty rate would allow miners to come up with a token daily using a simple PC from that era.

Those days are long gone. These days you must invest in a custom made ASIC mining piece of hardware if you want to get anywhere. You need to know how to set it up, you need a dedicated computer that will manage the mining toy, and you also need to know that it burns energy like crazy –energy that you will pay for. That being said, let’s focus on another issue in this article. What kind of time did it take to mine a Bitcoin during 2018?

Meet your friend the hash rate

Mining a Bitcoin is a collateral effect of creating new blocks for the chain and not the other way around. You are looking to be the next guy who comes un with the chain’s next new block, and you’re getting a Bitcoin as a reward for that. So the real question is: how long will you need to mine a block? In order to tell you that, we need to tell you what hash rates are within Bitcoin’s blockchain technology.

Hashes are a little cryptographic toy. A mathematical procedure that cannot be solved analytically which is why the solutions are called “collisions”. Every new block needs a hash collision calculated because that cryptographic bit is essential to keep the whole blockchain secured.

Every new block includes several new coins, new information to append to the network’s ledger, and some other pieces of information, but it is the solution to the hash collision that makes it fit into the pre-existing blockchain. Thus, a hash rate tells you how many hashes a specific piece of hardware can solve in a given period of time. As the mining community is dominated by large mining farms that keep growing, Bitcoin’s hash rating keeps growing by the day.

Meet the mining difficulty

During June of last year, Bitcoin’s hashing power exploded by five exahash in only two weeks. To give you an idea of what kind of nuclear blast that was, know that one year before that, the aggregated power in the whole Bitcoin network totaled six exahash.

The spike was sudden and spectacular. And what does it mean? Did a lot of new miners join the network precisely as Bitcoin’s price was sinking down like led at the sea? That’s exceedingly unlikely. A much better reason would be that ASIC chips became a lot more advanced and could solve a lot more hashes in a lot less time.

The previously described explosion in computing power is not a first for Bitcoin. The very same phenomenon happened when the miners left their CPUs behind and adopted GPU-based mining. That change in paradigm allowed for a few ASIC manufacturing firms (such as Bitmain) to become almost monopolistic in the market.

Meet the world’s most important ASIC manufacturers: Pangolin, Avalon, Halong, and Bitmain.

The difficulty in mining Bitcoin has gone up by 2% over the last month. A couple of percentage points may seem like a trivial increase, but it keeps going up every 2016 blocks (which, at current rates, takes one or two months). This is why any data you could find online about how difficult it was to find new blocks one or two years ago is utterly meaningless now. The available hardware is different and so is the difficulty level, which has grown exponentially.

Mining speeds

A new Bitcoin token comes into the world every ten minutes, more or less. The reward for every new block is of 12.5 coins as of now (but it will get halved every so often). In order to get some of those 12.5 coins, you need to lend your hashing power to the mining pool that actually found that new block, and it usually takes a lot of nodes in a pool to find the solution for a single block.

Please keep in mind that we’re talking averages here. The process of calculating a collision correctly is not deterministic, because, as stated before, there is no analytic way to solve it (ie, there is no formula) and, thus, the only approach to solve it is by random trial and error. It’s nothing but guessing at an industrial level. So we don’t know how long it takes to come up with a new block.

Nobody really knows. But it takes fewer than ten minutes most of the time. But while that’s only an average, it’s the target that miners set for themselves. Also, this rate requires the full collaboration of the whole Bitcoin network. If half of the miners suddenly went offline, there’s no way to predict what would happen with that average.

Let’s say that you want to mine a new Bitcoin block on your own, using your beloved laptop or desktop standard computer, at the current difficulty level, and without using specialized ASIC chips. How long would that take you? Not to break your heart, but you’d never manage it. The mathematical forecast is that it would take you more than eternity. Your computer would run for decades without bumping into your desired new block.

And there’s an additional problem. Taking centuries to solve a single collision is obviously not profitable in terms of power. And since we’re in the bad news department already, we’ll have to tell you that even GPU-mining has not been profitable for years now (because of power and hardware costs, mainly) unless you own and run a large farm with lots of mining rigs in the network.

That’s not to say that effective mining is impossible, but it requires for you to join a mining pool. Yes, that means you’ll have to share the token reward with every single active member in the pool. In most pools, the reward is proportional to the hash power every user contributes to them. You’ll need to be responsible for something like 4% of the pool’s computing power if you want to earn a Bitcoin.

Going back to our central question, how long does it take for a pool to mine a Bitcoin? Nobody really knows. Yes, we know, this seems to be the correct answer a little bit too often, but things are like this. The answer depends on the kind of pool you choose to join and the equipment that you and the other pool member are using for mining. Oh, and let’s not forget, you have to pay a fee to the pool for joining. How much? Here’s what some of the better-established pools charge you: Antpool: 1%; BTC: 3%; Slush Pool: 2%; BW: 1%.

There’s nothing stopping you from going into the mining business on your own, of course. But in order to have a reasonable chance at success, you’d need to ensure you own the very best mining hardware in the market and that isn’t cheap. Say you go for an Antminer S9 (just do a quick Google research for it). That bad boy is going to take $2.100 USD out of your bank account.

And how quickly will your new toy take to come up with a block? Well, this miner’s hashing rate is more or less of 13.0TH/s. That will get you 0.02 BTC monthly. So you’ll need about 50 months to mine a Bitcoin. A single Bitcoin. And you’re using one of the most powerful ASIC chips in the market. But the situation is even worse because the mining difficulty will keep rising as your computing power stays the same.

Of course, you can engage in solo mining as well, but you need top-notch mining hardware for that. For example, Antminer S9 will set you back $2100. How long does it take to mine a Bitcoin with ASIC? Considering that this miner has a hashing rate of about 13.0TH/s, you would be able to mine 0.02 BTC per month (72.92 USD at current trading prices).

Hence, it would take about 50 months to mine a single Bitcoin with one of the most advanced mining chips on the market, but this is a very vague prediction if you take into account the constantly rising mining difficulty so the longer it takes, the farther away your desired coin gets from you. Yes, it’s heartbreaking, but the math doesn’t forgive.

So how much for a Bitcoin?

So now you know how long it will take. We can use that information to figure out how expensive your brand new bitcoin will be.

It’s all about location because the cost is intimately related to electricity prices and those vary wildly from country to country. Venezuela, for instance, has the cheapest electricity in the world, and you would spend $531 in your coin (assuming you don’t mind living in a country in which people can’t buy food anymore).

But if you should like to live in a nice country that’s considered to be one of the world’s main hubs when it comes to crypto, then you would have to move to South Korea, which has the highest power prices and, there, you’d have to spend more than $26,000)

If you are in the United States of America, electricity will also be determinant, and, depending on the state you live in, you will need to invest from $4,000 to $6,000. Again, that’s what would it cost if the difficulty levels were constant, but they’re not. And at the current trading price of $3,646, you’d be losing money.

So now you know the bitter truth. What do you think now? Are you up to become a digital miner? We wish you the best of lucks, whatever you decide.

[Image courtesy of Flicker]

Disclaimer: All information provided through this article should not be regarded as investment advice, nor should be taken for granted for crypto trading purposes. Before making any investment or trading plans, make sure to inquire about the information diligently by carrying out your very own research. Thank you.

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